Unions claim that announcements regarding new Fallout titles were used as a smoke screen to cover up illegal layoffs conducted by Bethesda. On July 17, Bethesda pleased fans of the franchise by revealing plans to release several new entries, while simultaneously working behind the scenes to prematurely terminate the contracts of numerous developers in Canada.
Xbox laid off Bethesda staff on the same day it announced new Fallout games
According to the OneBGS union, which represents the affected workers, the public announcement of the new Fallout games was timed to coincide with the termination decision to fill news outlets with positive coverage about Bethesda.
The union states that studio leadership ended contract work months earlier than anticipated, offering no severance or negotiation attempts:
Union Timeline and Actions: Workers were initially told they would remain employed through September while the company negotiated severance with the union. However, on July 17, studio leadership sent emails stating that contracts would terminate that very same day.
Furthermore, Bethesda elected to pay only the legal minimum required under Canadian law and immediately cut all health coverage provided to affected workers.
Legal action against Bethesda and Microsoft
In response, OneBGS filed legal action against both Bethesda and its parent company, Microsoft. Similar legal steps were taken by the Communication Workers of America and CWA Canada, other representation groups for studio workers.
The unions accuse the corporations of using the game announcements to:
Violate labor laws and collective bargaining agreements.
Fail to meet statutory obligations to discuss layoff terms with worker representatives during ongoing negotiations for a major contract.
Impact on studio morale and future projects
Reports from inside Bethesda reveal that the Xbox-driven layoffs have severely impacted employee morale among remaining staff, with many expressing ongoing job insecurity.
Project Delays: The loss of institutional knowledge is expected to delay the release of new Fallout and The Elder Scrolls titles.
Service Closures at ZeniMax Online: Following significant staff losses, ZeniMax Online demonstrated the immediate operational consequences of the cuts. On Wednesday, July 22, the studio announced it will shut down the browser-based version of The Elder Scrolls Online‘s Crown Store because it no longer has the personnel necessary to maintain it.